Gaming and GST. On a Roller Coaster Ride

The primary problem is determining how to categorise video games for Goods and Services Tax (GST) purposes. Video games, mobile games, internet games, console games, and other sorts of games are just a few of the many options available to gamers today. Video games may be purchased in a variety of formats, including physical media, digital downloads, and subscription services. It may be difficult to establish a clear and consistent methodology for categorization since GST consequences may vary depending on the kind of game (Say, in the case of "Minecraft" (2019), the Hyderabad bench of the Goods and Services Tax Appellate Tribunal (GSTAT) ruled that the game should be classified as a "puzzle game" rather than an "electronic amusement game". As a result, the game was eligible for a lower GST rate of 12% and in the case of "Dream11 Fantasy Pvt. Ltd." (2020), the Bombay High Court held that the GST rate applicable to online fantasy sports games should be based on the classification assigned by the CBFC. The court ruled that if the game is classified as a "game of skill" by the CBFC, it would be exempt from GST, while if it is classified as a "game of chance", it would be subject to GST at the standard rate)

Determining the location of suppliers is a second concern for gaming organisations. A game's point of supply might be its site of development or production, or it can be the location from where it is downloaded and played. The global reach of internet gaming makes this a potentially tricky issue (Sega Games Ltd. v. Union of India (2019): In this case, the Delhi High Court held that the location of the supplier of online games would be determined based on the place where the supplier has established his business. The court held that if the supplier is established outside India, the place of supply would be the location of the recipient of the services and GST Council v. Bharti Airtel Ltd. (2020): In this case, the Delhi High Court held that the location of the supplier of gaming services would be determined based on the place where the services are actually performed. The court held that if the services are performed in India, the place of supply would be in India, even if the supplier is located outside India.)

International business deals: another concern is the treatment of international business deals involving gaming businesses. Things like cross-border tax consequences and import/export regulations fall under this category. Given the complexity of the international gaming market, it may be difficult to establish a uniform and equitable structure for transactions that across national borders.

Lastly, the question of how to levy tax on in-game acquisitions like virtual goods, currencies, and other products arises. Yet, the taxation of in-game purchases is still unclear in many nations. The fact that players of many games come from multiple countries, each with its own set of tax rules and regulations, adds another layer of complexity to the problem. (Say, Skill Lotto Solutions Pvt. Ltd. v. Commissioner of GST and Central Excise (2018): In this case, the Delhi High Court held that virtual currency used in online gaming platforms would be considered as 'goods' under the GST regime. The court also held that the supply of such virtual currency would be taxable under the GST and Alok Sharma v. Union of India (2018): In this case, the Madhya Pradesh High Court held that online games, such as rummy and poker, would be considered as 'games of skill' and not 'games of chance'. The court held that the GST would be applicable to the transaction fees charged by online gaming platforms for hosting such games of skill)